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You don't think it's a liquidity problem?
Well, I mean, interest rates are very low, so I think it's going to be a question, first of all, of getting credit flowing again. And the Federal Reserve has got a role to play there. And then, Congress and the Administration will consider possible programs and fiscal policies.
You're definitely not okay with long-term profligacy, but are you okay with them doing something in the short-term?
I think if they do that, it's critically important they clarify the longer-term plan for establishing sustainable fiscal [policy].
There are some economists who think that perhaps this time around the unemployment problem might be different than in previous recessions that came up very fast, or were shed very quickly. Are you among those who think that there might be something more structural about it this time, something about the kind of things America makes now, that it didn't make 10 or 20 or 30 years ago during past recessions, to make unemployment a different problem this time than in previous downturns?
No, I don't see much evidence that the structure of the labor market the job market has changed very much. I think we still can deliver unemployment rates similar to what we saw before the crisis, and as the economy grows, firms are going to have to put people back to work in order to meet the demand for their products. And I expect the unemployment rate to come down over a period of time. We don't, at this point, have any reason to believe that long-term unemployment the unemployment rate will be higher in the long term than it has been in recent years.
What does the chairman of the Fed have in his wallet? And can you show it to us?
My wife just got me a new wallet, because my old one was too raggedy, so I'm glad I got a new one.
How new is that one?
It's just a week old.
Where did you get it?
We want to see the old one.
I don't know where she got it from. I've got a Washington, D.C. driver's license. I've got my American Express card here. I've got a debit card, a Jos. [A.] Bank card, where I get my suits from. And I have a health insurance card. And then I have a variety of other cards, phone numbers, United Airlines, frequent flyer.
How much cash?
And I have (Laughter.)
I have $45, $75, $85... I'm all set.
We have all admired your basketball a couple of years back at the office. And I, for one, said he's got a really good-looking jump shot. Have you played basketball with President Obama?
I have not, and I don't think I'm really in his league, to tell you the honest truth. He's a pretty serious player. [Treasury Secretary Timothy] Geithner is a good player.
Geithner is a good basketball player?
Geithner is a good athlete, in general.
Right, he plays tennis, I know.
He's a very good tennis player. I know he plays with the President.
So, when you're playing in that gym by yourself, why don't you invite the President to shoot 21 with you, or around the world, or something like that?
Well, you know, if I were one of his advisers, maybe I I think this is the independence of the Federal Reserve being exhibited here.
How often do you see the President, either President? You served under two Presidents.
I saw President Bush very frequently, in part, because he knew me very well, because I was his chairman of his Council of Economic Advisers for a while. I see President Obama less frequently, but I have he relies, of course, on his own I'm not his adviser. I'm a separate part of a separate agency, but I have very frequent interactions with his advisers, Geithner, [Director of the National Economic Council Larry] Summers.
Do you find it odd how quickly everyone forgets that you were appointed by the last President, and were on his Council of Economic Advisers?
Have they forgotten yet?
So, I'm a fringe economics type, I'm not personally, but I'm saying a reader picks up TIME Magazine, and they see this and they go, oh, my God, Ben Bernanke, low interest rates caused this whole thing. He's just an extension of that devil man, Alan Greenspan. Low interest rates, this is the whole cause. What's your bullet answer to that?
It's hard to give a bullet answer.
Monetary policy in the early part of this decade was accommodated for good reasons. There was a recession in 2001, there was the jobless recovery, inflation was very low. Keeping interest rates low to get the economy back on track was a reasonable thing to do. I think there are a lot of forces that led to the crisis, a whole range of things were relevant there. I don't think that monetary policy was a particularly important source of the crisis.
That's a good enough answer.
John mentioned earlier, talked about you had a career as an academic. Certainly, by the standards of the people you regulate now, and bankers, you're not a wealthy man. Where do you keep your money? What do you do with your finances?
I have my teacher's pension a little money in Merrill Lynch, and money in the bank. That's about it.
The money in the bank, like cash?
Like cash, checking accounts. And a house, we own a house on Capitol Hill. My ride is a Ford Focus.
What's your interest rate?
That I'm earning?
No, on your house. Do you have a mortgage?
Oh, yes, we refinanced.
Oh, perfect. When?
About 5%. A couple of months ago.
We had to do it because we had an adjustable rate mortgage and it exploded, so we had to.
So, did you get a fixed rate at 5%? I think this might be the most valuable piece of information.
Thirty years fixed rate at a little over 5%.